Computer driven high frequency trading
machines. Synthetic trading machines that utilize highly advanced
algorithms ( synthetic Intelligence). These Boxes rely on humans for
programming and turning the power switch on and off. Board
This refers to the “Quote Board” which is
comprised of all the MAJOR World Bond, Currency, Stocks, Stock Indices and
A breakeven stop is a tool we employ to
protect our days beginning balance. After we get our 4 points to “pay for the
trade” we can use the 4 points as our risk capital. So we adjust our stop to
use that profit as a capital preservation tool.
Market On Close - MOC
Buy or Sell an instrument @ market during the
Matches are about recognizing capital flow.
We want to know which of the Indices are leading and which are lagging.
Furthermore and importantly, we are looking for match ups in the different
Indices at Pax's targets. These are significant matches. When targets match in
Indices and related markets such as bonds, metals and currencies then we have a
major target or level from which to make bigger trading decisions.
The Mid-Week shuffle (often times involves “Rip
Your Face Off” contra-trend direction) is a time when markets are trying to
affirm or change direction. This involves instruments that are trying to
relieve the directional pressure (RSI’s) – general price action that tries
to drive out directional players.
Outside Reversal Higher - ORH(Not to be confused with the Opening Range High)
Outside Reversal Higher. When a market’s
price range for a particular period is outside the prior period’s range, it is
an outside range. A new low from the prior period or bar followed by a new high
and a close over the previous bars high – this is an ORH. These are significant
as they often occur at the end of a primary downtrend. Multiple time frames can
be considered and their significance weighted with other technical factors.
They can telegraph big trend changes.
Outside Reversal Lower - ORL(Not to be confused with the Opening Range Low)
Outside Reversal Lower. When a market’s price
range for a particular period is outside the prior period’s range, it is an
outside range. A new high from the prior period or bar followed by a new low
and a close below the previous bars low – this is an ORL. These are significant
as they as they often occur at the end of a primary uptrend. Multiple time
frames can be considered and their significance weighted with other technical
factors. They can telegraph big trend changes.
*Why are these important?
The (OR) Outside Reversal levels
are typically where shorter-term players have “Trailing” or “Resting” stops for
profit protection. We identify and track these areas to determine if a trend is
abating or it’s just a level that is washing out shorter-time frame investors. This is where the rubber meets the road and
direction is decided.
Pay for the trade
A first target that enables us to protect our
initial balance or be used as risk capital.
As technicians we want to see how a
particular instrument reacts at a specific price or level. Is the instrument holding or failing at a
specific price or predetermined level? Does the instrument reject or follow
through in direction?
Risk On is generally a concerted buying of stocks
and high yielding assets generated by easy money looking for a return. Risk Off is a deleveraging of those trades. Investors
sell ( liquidate holdings ) across all asset classes and buy Bonds for safety.
Positions that follow the capital flow over
multiple days, weeks and even months.
A scratch stop is a stop loss order placed at
the exact price we initiated the trade. We are not anchored to price. We employ
this stop once the market gives us more than a point or 2 of potential profit
but does not pay us our 4 points. If price comes back to OR and stops us out
for scratch and moves back out we can always the trade back on. We also will
employ a scratch stop after we have paid for our trade to protect the entire 4
points as profit.
Long S&P 500 Futures / Short 30 Yr.Bond
Futures. This is an indicator of Capital Flow – “Is money is moving into
equities and out of Bonds?”
Time Frame Trading
While some short term traders consider a time
frame in the minutes or minute, we have a much broader view. We refer to when
different regional players come into the market. This can be Europe ’s opening and Asia ’s close or the U.S. opening of Futures
through London ’s close and NYC ’s lunch time. The bigger time frames always
start and stop at the end or beginning of a major Financial center ’s trading hours. This is when we look for order flow to ebb, and
possibly change direction.
The level or area to best manage your risk.
This comes down to Intelligent Risk Management. Where can an
investor initiate a trade with a defined risk parameter (STOP). Where can you initiate a trade and have a
reasonable chance of success? In other words… know where you ’re wrong. This has two key elements... Timing and Technical level. Both
need to be correct. This is the where and when – so crucial for low risk investing. See video.